Management a practical introduction 8e kinicki 1

www.freebookslides.com 8E MANAGEMENT a pr actical introduction Angelo Kinicki Brian K Williams www.freebookslides.com Angelo Kinicki Arizona State University Brian K Williams EIGHTH EDITION management a practical introduction www.freebookslides.com MANAGEMENT: A PRACTICAL INTRODUCTION, EIGHTH EDITION Published by McGraw-Hill Education, Penn Plaza, New York, NY 10121 Copyright © 2018 by McGraw-Hill Education All rights reserved Printed in the United States of America Previous editions © 2016, 2013, 2011 No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw-Hill Education, including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning Some ancillaries, including electronic and print components, may not be available to customers outside the United States This book is printed on acid-free paper LMN 21 20 19 18 17 ISBN 978-1-259-73265-2 MHID 1-259-73265-7 ISBN 978-1-259-89891-4 (Instructor’s Edition) MHID 1-259-89891-1 Senior Vice President, Products & Markets: Scott Virkler Vice President, General Manager, Products & Markets: Michael Ryan Vice President, Content Design & Delivery: Betsy Whalen Managing Director: Susan Gouijnstook Director: Michael Ablassmeir Director, Product Development: Meghan Campbell Lead Product Developer: Kelly Delso Product Developer: Katie Eddy Marketing Managers: Necco McKinley, Debbie Clare Market Development Manager: Nicole Young Digital Product Analyst: Sankha Basu Director, Content Design & Delivery: Terri Schiesl Program Manager: Mary Conzachi Content Project Managers: Mary E Powers, Danielle Clement Buyer: Sue Culbertson Design: Jessica Cuevas Content Licensing Specialists: Shannon Manderscheid, AnnMarie Jannette Cover Image: Alejandro Loya/Eye Em/Getty Images Compositor: Aptara®, Inc Printer: LSC Communications All credits appearing on page are considered to be an extension of the copyright page Library of Congress Cataloging-in-Publication Data Names: Kinicki, Angelo, author | Williams, Brian K., 1938- author Title: Management : a practical introduction / Angelo Kinicki, Arizona State   University, Brian K Williams Description: Eighth edition | New York, NY : McGraw-Hill Education, [2018] Identifiers: LCCN 2016047738 | ISBN 9781259732652 (alk paper) | ISBN   1259732657 (alk paper) Subjects: LCSH: Management Classification: LCC HD31 K474 2018 | DDC 658—dc23 LC record available at https://lccn.loc.gov/2016047738 The Internet addresses listed in the text were accurate at the time of publication The inclusion of a website does not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education does not guarantee the accuracy of the information presented at these sites mheducation.com/highered www.freebookslides.com dedication To Joyce Kinicki, the love of my life, best friend, and the wind beneath my wings —A.K To my wife, Stacey, for her 31 years of steadfast, patient support and for her collaboration and shared adventures; and to my beloved children and their families—Sylvia, Scott, and Atticus and Kirk, Julia, Nicolas, and Lily —B.K.W www.freebookslides.com about the authors Angelo Kinicki is an emeritus professor of management and held the Weatherup/ Overby Chair in Leadership from 2005 to 2015 at the W.P Carey School of Business at ­Arizona State University He joined the faculty in 1982, the year he received his doctorate in business administration from Kent State University He Courtesy of Angelo Kinicki was inducted into the W.P Carey Faculty Hall of Fame in 2016 Angelo is the recipient of six teaching awards from Arizona State University, where he taught in its nationally ranked MBA and PhD programs He also received several research awards and was selected to serve on the editorial review boards for four scholarly journals His current research interests focus on the ­dynamic relationships among leadership, organizational culture, organizational change, and individual, group, and organizational performance Angelo has published over 95 articles in a variety of academic journals and proceedings and is co-author of textbooks (31 including revisions) that are used by hundreds of universities around the world Several of his books have been translated into multiple languages, and two of his books were awarded revisions of the year by The McGraw-Hill Company Angelo is a busy international consultant and is a principal at Kinicki and Associates, Inc., a management consulting firm that works with top management teams to create organizational change aimed at increasing organizational effectiveness and profitability He has worked with many Fortune 500 firms as well as numerous entrepreneurial organizations in diverse industries His expertise includes facilitating strategic/operational planning sessions, diagnosing the causes of organizational and work-unit problems, conducting organizational culture interventions, implementing performance management systems, designing and implementing performance appraisal systems, developing and administering surveys to assess employee attitudes, and leading management/executive education programs He developed a 360° leadership feedback instrument called the Performance iv Management Leadership Survey (PMLS), which is used by companies throughout the world Angelo and his wife of 35 years, Joyce, have enjoyed living in the beautiful Arizona desert for 34 years They are both natives of Cleveland, Ohio They enjoy traveling, hiking, and spending time in the White Mountains with Gracie, their adorable golden retriever Angelo also has a passion for golfing Brian K Williams has been managing editor for college textbook publisher Harper & Row/Canfield Press in San Francisco; editor-in-chief for nonfiction trade-book publisher J P Tarcher in Los Angeles; publications and communications manager for the University of California, Systemwide Administration, in Berkeley; and Courtesy of Brian Williams an independent writer and book producer based in the San Francisco and Lake Tahoe areas He has a BA in English and an MA in communication from Stanford University Repeatedly praised for his ability to write directly and interestingly to students, he has coauthored 22 books (66, counting revisions) This includes the 2015 Using Information Technology: A Practical Introduction, 11th ed., with his wife, Stacey C Sawyer, for McGraw-Hill Education In addition, he has written a number of other information technology books, college success books, and health and social science texts Brian is a native of Palo Alto, California, and San Francisco, but since 1989 he and Stacey, a native of New York City and Bergen County, New Jersey, have lived at or near Lake Tahoe, currently in Genoa (Nevada’s oldest town), with views of the Sierra Nevada In their spare time, they enjoy foreign travel, different cuisine, museum going, music, hiking, contributing to the community (Brian is past chair of his town board), and warm visits with friends and family Management: A Practical Introduction was twice the recipient of McGraw-Hill/Irwin’s Revision of the Year Award, for the third and fifth editions www.freebookslides.com new to the eighth edition We are pleased to share these exciting updates and new additions to the eighth edition! Teaching Resource Manual (TRM) We created the resources you need in our newly developed Teaching Resource Manual The TRM, created by Angelo Kinicki and subject-matter experts, provides a turn-key solution to creating a discussion-based and experiential learning experience It is a combination Instructor’s Manual, Connect Instructor’s Manual and Implementation Guide containing a wide variety of teaching tips, outlines, suggested videos, group exercises, lecture enhancers, supplemental exercises to correspond with cases and pedagogical features of the product as well as answers to all end-of-chapter exercises Connect In our continuing efforts to help students move from comprehension to application, and to ensure they see the personal relevance of management, we have added these new application exercises to our already robust Connect offering: • Self-Assessments—Self-awareness is a fundamental aspect of professional and personal development Our 90 research-based self-assessments give students frequent opportunities to see how organizational behavioral concepts apply to them personally New to this edition is structured feedback that explains how students should interpret their scores and what they can to develop the trait or skill being measured This feedback is followed immediately by self-reflection quizzes that assess students’ understanding of the characteristics being measured and the action steps they may want to take for improvement • iSeeIt Videos—Brief, contemporary introductions to key course concepts that often perplex students This series will enhance your student-centered instruction by offering your students dynamic illustrations that guide them through the basics of core principles of management concepts such as motivation, leadership, socialization, and more The idea behind the series is if a student came to your office and asked you to explain one of these topics to him or her in a few minutes—how might you explain it? Consider using these practical and applicable resources before class as an introduction, during class to launch your lecture, or even after class as a summative assessment Chapters In each chapter we have refreshed examples, research, figures, tables, statistics, and photos, as well as streamlined the design for ease of navigation and improved readability We have also largely replaced the topics in such popular features as the Manager’s Toolbox, Practical Action box, Example boxes, Management in Action, and Legal/Ethical Challenge While the following list does not encompass all the updates and revisions, it does highlight some of the more notable changes CHAPTER • Section 1.1—new material in Example box on efficiency versus effectiveness: how airlines deal with “seat densification” and other passenger complaints; updates on financial rewards of being an exceptional manager • Section 1.3—new Example box on struggle for competitive advantage covers how Airbnb shakes up the hotel business Re-sequencing of seven challenges to being an exceptional manager Managing for information technology moved from #4 to #2 and new material added Managing for sustainability moved from #6 to #5 and new material added • Section 1.4—replaced in-text example of nonprofit general manager: now Susan Solomon, CEO of nonprofit New York Stem Cell Foundation • Section 1.5—principal skills managers need—technical, conceptual, and human—now appear with definitions first Updates of GM CEO Mary Barra as example of these managerial skills New Practical Action box added on the soft skills v www.freebookslides.com employers say college graduates lack, including communication and interpersonal skills; critical thinking and problem solving; and ethical judgment, innovation and creativity, and motivation • Section 1.6—new example of a Mintzberg manager: Paul Orfalea, former CEO of Kinko’s • Section 1.7—outdated example of Homejoy as Example box of hot start-up deleted • New Management in Action case titled “Yahoo! CEO Marissa Mayer Is under Pressure to Make Big Changes” CHAPTER • Section 2.1—material added on practical reasons for studying a chapter on theory • Section 2.3—update with new material of Example box on what behavioral science says about the open-plan office • Section 2.5—revision of systems discussion to include concept of synergy New Example box on systems and whether nudges achieve results, with discussion of repaying student loans in closed systems versus open systems • Section 2.6—in Practical Action box on evidence-based management, new material on proving and disproving theories, the purpose of research • New key term for synergy • New Management in Action case titled “Best Buy Uses Management Theories to Improve Corporate Performance” • New Legal/Ethical Challenge titled “What Should You Do about an Insubordinate Employee?” CHAPTER • Section 3.1—material added to introductory discussion of triple bottom line • Section 3.2—updates to Example box on PG&E and discussion of who are a company’s most important stakeholders Updates to discussion of internal stakeholders: employees, owners, directors • Section 3.3—update to discussion of external stakeholders, including Example box on Amazon’s Bezos and effect of decisions on stakeholders Revised Example box on local communities as stakeholders and question of financial incentives to sports teams and other businesses More text details added, including definition of venture capital, FAA and regulation of drones, boycotting of Academy Awards by prominent African Americans, description of GM and recalls, and falling productivity growth in relation to technological innovations New Example box on how technology disruption changes everything: wider availability of knowledge, engineering of life through gene modification, mobile devices changing human relations More on effects of sociocultural forces on organizations, with expanded in-text example of sweets and obesity Expanded details on effects of political– legal forces and international forces • Section 3.4—expansion of details on manager’s ethical responsibilities, including Volkswagen software scandal, accountability of auditors, more on insider trading, Sarbanes–Oxley, cheating by students and corporate employees, whistle-blowing vi New to the Eighth Edition • Section 3.5—expanded discussion on climate change, including public opinion support and Coca-Cola’s goal for replenishing water Details added on philanthropy and philanthropists, including Apple’s Tim Cook Introduction and discussion of ethical leadership and effect on employee behavior and work performance • Section 3.6—new discussion of ethics and corporate governance Updated Example box on late Chesapeake CEO Aubrey McClendon as example of irresponsible corporate governance • New key terms for ethical leadership, venture capital • New Management in Action case titled “Blue Bell Is Accused of ‘Recall Creep’ in Its Handling of Ice Cream Contamination” • New Legal/Ethical Challenge titled “Should You Apply to Have Your Student Loans Forgiven?” CHAPTER • Revised Manager’s Toolbox, on the benefits of international business travel • Section 4.1—new details on products made in the U.S., country rankings for competitiveness (Table 4.1) and GDP, and countries considered “most free.” New Example box on e-commerce, covering peer-to-peer shopping by smartphone More material on positive and negative effects of globalization, and new material on worldwide megamergers, such as pharmaceuticals and beer makers New Example box on the sharing-based economy and starting an Internet enterprise, such as Poshmark and ArtLifting • Section 4.2—new material introduced on global mind-set, with revised Practical Action box about learning to be a success abroad Revised material on multinational enterprises Example box on working overseas revised with new details New details on classic American brands now foreign owned, such as Jeep, Ben & Jerry’s, Gerber, Motel • Section 4.3—new material on involvement of U.S firms overseas, such as Netflix, Apple, Ford Discussion of counter trend to offshoring—re-shoring New details in Practical Action box on jobs lost to outsourcing, including programmers, accountants, lawyers Revision of Table 4.2 listing top 10 exporting countries • Section 4.4—on free trade, updated material on TPP and major competitors the BRICS countries, as well as Brexit Revised Table 4.3 on top 10 U.S trading partners Expanded discussion on embargoes and introduction of concept of sanctions Update on WTO and Doha Round and overhaul of IMF Discussion of NAFTA revised, with new details Discussion of EU includes Brexit controversy along with refugee problems and terrorist attacks in Europe Discussion of APEC, ASEA, Mercosur, and CAFTA trading blocs collapsed into a table, Table 4.4 New discussion on proposed Trans-Pacific Partnership Updating of data in Example box on currency exchange rates Introduction of new discussion of BRICS countries as important international competitors, with definition and new table of comparisons (Table 4.5), plus extended discussion of China, India, and Brazil • Section 4.5—new in-text examples of the importance of understanding cultural differences and potential cultural www.freebookslides.com pitfalls Addition of discussion of Hofstede model of four cultural dimensions New in-text example of Venezuela and effects of expropriation New details added about least and most corrupt countries in the world, and addition of details about slave labor • New key terms for Brexit, BRICS, global mind-set, sanctions, TPP • New Management in Action case titled “Costco Plans to Grow Its International Markets” • New Legal/Ethical Challenge titled “How Far Should World Leaders Go in Accommodating Other Leaders?” • • • CHAPTER • Revisions to Manager’s Toolbox, including advantages of having a college degree and importance of writing out goals • Section 5.1—new chapter lead on planning, and definition of a plan introduced Revision of Example box on writing a business plan Redefinition of strategy or strategic plan, with in-text examples Revision of Figure 5.1 on planning and strategic management to include new elements, including addition of “values” to the first step and addition of “tactical” to third step New details regarding Starbucks entering China market Major revision to Example box on developing competitive advantage—who dominates the Internet economy and who’s losing, including discussion of big five companies that dominate the Internet economy (Amazon, Apple, Facebook, Google, and Microsoft) and description of the stack fallacy New subsection introducing concept of VRIO analysis as a way to analyze competitive potential, creation of new Figure 5.2 on VRIO analysis, and explanation of each concept of VRIO (value, rarity, imitability, and organization) • Section 5.2—new section lead about importance of hope as a basis for having a goal Discussion that mission and vision should express an organization’s values Revision of Figure 5.2 on making plans, with addition of “values statement” to the mission statement and vision statement Example box revised on comparison of mission statements of three companies, featuring Hilton and Patagonia and replacing Amazon with Facebook Example box revised on comparison of vision statements of these three companies New subsection created about values statement, with definition, and what values firms want to emphasize New Example box created comparing values statements for Hilton, Facebook, and Patagonia, with explanations Major rewrite of Example box created about strategic planning by top management, covering problems of conventional quarterly “short-termism” as opposed to the long-term strategy of Amazon • Section 5.3—distinction introduced between long-term and short-term goals, with definitions Discussion of means-end chain to show how goals are connected Redefinition of operating plan and action plan Major revision of Example box on Southwest Airlines to show long-term and short-term goals • Section 5.4—section retitled “Promoting Consistencies in Goals: SMART Goals, Management by Objectives, and Goal Cascading.” Revised Example box on setting goals, about whether big companies are serious about sustainability and climate change, showing efforts of Walmart Introduction of • concept of cascading goals in a subsection, making lowerlevel goals align with top goals, with key term of cascading goals and description of cascading process Revision of Practical Action box on achieving one’s important goals, opening with discussion of problem of noncommitment Section 5.5—new Example box on the planning/control cycle, featuring development of the Apple Watch New key terms for cascading goals, long-term goals, plan, short-term goals,strategic plan, values statement, VRIO New Management in Action box titled “The McCloskeys Plan to Implement Sustainable Dairy Farming While Providing Healthier Products” New Legal/Ethical Challenge titled “Do You Think It’s Ethical for Companies to Move Their Headquarters to Another Country to Save Taxes?” CHAPTER • Manager’s Toolbox revised to emphasize successful managers have to avoid fads and know their own core values • Section 6.2—new Example box about when the strategic management process fails, as with Kodak not having an ecosystem, or “wide lens,” perspective Revision of Figure 6.1 showing the strategic management process so first step is “Establish the mission, vision, and values statements” • Section 6.3—section retitled “Establishing Mission, Vision, and Values Statements.” New in-text examples given of mission, vision, and values statements, and characteristics of a good values statement are described Table 6.1 revised to add characteristics of values statements • Section 6.4—major revision of Example box on SWOT analysis using example of Toyota Major revision of Example box on contingency planning to describe problems for insurance companies of rising sea levels and significance of climate change and importance of risk modeling • Section 6.5—this section on formulating the grand strategy revised to describe four rather than three techniques to help formulate strategy Concept of innovation strategy introduced, using in-text example of Etsy Defensive strategy in-text example altered to show pressures on music industry Figure 6.3 on Porter’s four competitive strategies deleted as unnecessary Focused-differentiation strategy given new intext examples (Ford GT supercar, elite sections of cruise ships) In-text example added to show change in singleproduct strategy of Delphi Automotive now supplying selfdriving cars, automotive electrification, and safety gear Under diversification strategy, material deleted on unrelated and related diversification, and concept of vertical integration introduced, with in-text examples of Netflix and Starbucks New subsection on blue ocean strategy, with discussion of two instances of the strategy—inventing a new industry (as eBay did) or expanding the boundaries of an existing industry (as Home Depot did) • New key terms for blue ocean strategy, innovation strategy, vertical integration • New Management in Action case titled “IKEA Focuses on Growth” New to the Eighth Edition vii www.freebookslides.com CHAPTER • Section 7.1—Example box inserted here and updated on crisis leading to the strategic management process at Starbucks Example box on making a correct diagnosis updated and revised, changing conclusions as to whether men or women are better investors Obsolete Example box on faulty implementation of customer service deleted Example box on evaluation and the Boeing 787 Dreamliner updated and revised In-text example on satisficing and snap decisions changed from Campbell Soup to Amazon’s Echo • Section 7.2—new details added on business ethics • Section 7.3—new details added on evidence-based decision making, including Table 7.3 on Google’s rules for building a better manager, and other in-text updates Example box on analytics in athletics heavily revised to show “Moneyball” takeover of sports In-text example added on use of drones in same-day delivery Significant expansion of material on the implications of Big Data and how it is used, with new in-text examples on use in analyzing consumer behavior, improving hiring, tracking movie and music data, exploiting farm data, advancing health and medicine, and aiding public policy New Example box “Data, Hacking, and Privacy,” discussing rise of cyberthieves and possible corruption of automotive software • Section 7.5—details and updates added, including in-text examples, on how to overcome barriers to decision making, such as confirmation bias, overconfidence bias, framing bias, and escalation of commitment bias • New Management in Action case titled “How Did Decision Making Contribute to Volkswagen’s Emissions Cheating Scandal?” • New Legal/Ethical Challenge titled “Should Apple Comply with the U.S Government’s Requests to Unlock iPhones?” CHAPTER • Modifications made to Manager’s Toolbox on how to get noticed in a new job • Section 8.1—new introductory material added to section on aligning strategy, culture, and structure, emphasizing importance of an organization’s culture New figure introduced, Figure 8.1, showing that the right culture and structure are essential in realizing the organizational vision and strategy In-text examples added on importance of cultural tone in the hiring process New material added on positive and negative effects of cultures, with examples, including negative cultures of Zenefits, Volkswagen, and Mitsubishi • Section 8.2—in subsection on four types of organizational culture, competing values framework (CVF) defined and explanation of the organizational effectiveness along horizontal and vertical dimensions detailed New in-text examples introduced (Acuity insurance for clan culture, Google for adhocracy culture, Uber for market culture, Amazon shipping processes for hierarchy culture) New self-assessment 8.1 introduced, “What Is the Organizational Culture at My Current Employer?” Revision of Example box on cultures representing competing values—the different “personalities” viii New to the Eighth Edition • • • • • • • of Pfizer Pharmaceuticals, with update on shedding U.S corporate citizenship to lower taxes Section of three levels of organizational culture moved to earlier in the chapter, and in-text example added of CVS Health ceasing selling of tobacco as example of espoused versus enacted values In section on how employees learn culture, new subsection added on organizational socialization, with explanation of three phases (anticipatory socialization, encounter, and change and acquisition phases), along with in-text example of Miami Children’s Hospital Revisions to subsection on the importance of culture to various outcomes, including positive work attitudes and better financial performance Introduction of section on person–organization (PO) fit and how to use it in anticipating a job interview Section 8.3—details updated on process of cultural change, such as Zappos experiment in holocracy New SelfAssessment 8.2 on “Assessing Your Preferred Type of Organizational Culture” Section 8.4—revisions added to Practical Action box, “Reading the Culture: Avoiding Pitfalls on Your Way Up” Section 8.5—new details added on delegation and in Practical Action box on when to delegate Section 8.6—introductory material about Google revising corporate structure into conglomerate called Alphabet to bring more transparency and streamline decision making Section on virtual organization revised to explain concept of virtual structure, using example of Web-services company Automattic New key term for person–organization fit New Management in Action case titled “W.L Gore’s Culture Promotes Employee Satisfaction, Innovation, and Retention” New Legal/Ethical Challenge titled “Should Socializing outside Work Hours Be Mandatory?” CHAPTER • Details added to Manager’s Toolbox on soft skills and social graces • Section 9.1—section lead updated on HR benefits, including some new Google offerings Under human capital, in-text example added of Scripps Health offering career coaching and tuition reimbursement to develop human capital Material added on benefits of social capital, as in developing trusting relationships with others Under job description and job specification, in-text example added of Enterprise Rent-ACar sorting 50,000 candidates a month • Section 9.2—new section lead quoting expert that 5% of workforce produces 26% of output New material added on use of social media and mobile recruiting New in-text examples of effective ways of finding good job candidates, such as “blind dates” and competency-based selection strategies New details added on realistic job previews New Example box created on the changing job market, describing Millennials, the gig economy, and the episodic career Material added on most common lies found on resumes and additions to Practical Action box about lying on resumes www.freebookslides.com • • • • • • • • • Details added to Practical Action box on mistakes to avoid when applying for a job Practical Action box on interviewing recast from interviewer’s to applicant’s viewpoint, showing what the employer is looking for Example box on personality tests at sporting goods chain deleted New subsection added on how hiring is being changed by robots, talent analytics, algorithms, and the like Section 9.3—some details added/updated on compensation and benefits Section 9.4—new section lead, introducing onboarding Under training, discussion added on how high-impact learning programs increase profit growth and aid retention Under off-the-job training, discussion added on microlearning, with new Example box on technology-enhanced learning, discussing microlearning and e-learning Section 9.5—material and statistics added on performance appraisal Discussion of 360-degree feedback revised Discussion of forced ranking heavily revised and expanded Section 9.6—introduction of concepts of turnover and attrition, with other details and updates through the section New material added to Practical Action box on right way to handle a dismissal Subsection added exit interview and nondisparagement agreement, with discussion Section 9.7—discussion and details added on minimum wage, Toxic Substances Control Act, workplace discrimination, gender pay disparity, and bullying Section 9.8—update of Table 9.6 snapshot of U.S union movement and other material, including the two-tier setup Arbitration discussion broadened, including negatives Subsection added on new ways to advance employee interests, including easier ways to organize fast-food, construction, contract, and Uber workers New key terms for attrition, microlearning, onboarding, turnover New Management in Action case titled “Google’s Success Builds from Its Progressive Approach toward Human Resource Management” New Legal/Ethical Challenge titled “Should Non-compete Agreements Be Legal?” • • • CHAPTER 10 • Manager’s Toolbox revised to stress importance of the agility factor in managing for innovation and change • Section 10.1—new introductory material about fear as preamble to nature of change Revision of description of trends happening today, including necessity for faster speedto-market New Example box added on radical change, as represented in the decline of Radio Shack Revision of material on rise of knowledge workers and changes in middle-skill jobs In-text example on reactive change, discussing U.S public health authorities dealing with spread of measles in the face of anti-vaccination movement Example box on Disney World and its MagicBand technology updated In discussion of forces of change originating outside organization, new material on technological advancements and their significance as the Fourth Industrial Revolution New Example box on the upending of • • • • transportation, from ride sharing to self-driving cars Introduction of B corporation under shareholder changes, example of Millennials focusing on app-based shopping options, and influence of Brexit as example of how the global economy influences U.S business Under social and political pressures, discussion of sugary sodas and how to use tax to pay for popular programs Under forces originating inside the organization, new in-text example of human resources concerns using Foxconn’s employee suicides Under managers’ behavior, new in-text example of Facebook responding to accusations it suppressed conservative news Section 10.2—in-text example introduced of radically innovative change of Amazon’s testing new delivery system, Prime Air, involving drones Kotter’s eight steps for leading organizational change deleted as obsolete New subsection on a systems approach to change introduced, with new Figure 10.4 showing three parts of inputs, target elements of change, and outputs, with extended text discussion Readiness for change introduced New Self-Assessment 10.2 introduced, “What Is Your Readiness for Change?” New subsection added on force-field analysis and discussion of which forces facilitate change and which resist it Section 10.3—example of “jerks at work” as sources of conflict introduced in discussion of organizational development In-text example of IBM hiring thousands of designers to challenge conventional thinking Discussion of feedback loop added to Example box on using OD to make money in the restaurant business Section 10.4—under discussion of seeds of innovation, several in-text examples added, such as how GoPro camera was invented, Microsoft’s acquiring of LinkedIn, and Adobe Systems using Kickbox as a game to develop ideas Deletion of section celebrating failure and Example box on 3M, and addition of new subsection on how companies can foster innovation, with seven components explained in the text and in new Table 10.2 on creating an innovation system Table 10.3 revised of top 2016 organizations whose cultures strongly encourage innovation New Example box added on achieving success through innovation and collaboration, using example of Tesla’s “Culture of Openness,” with four tips for “going Tesla” Section 10.5—Example box of Collins’s five stages of decline deleted for space reasons Explanations and details added to model of resistance to change, with new in-text examples New key terms for force-field analysis, innovation system, readiness for change New Management in Action case titled “J.C Penney Is Effectively Navigating Strategic and Managerial Change” New Legal/Ethical Challenge titled “Did L’Oreal Go Too Far in Firing Its Patent Lawyer?” CHAPTER 11 • Manager’s Toolbox on mythical Millennials revised to show generalizations about what they want most Gen Xers and Baby Boomers want as well New to the Eighth Edition ix www.freebookslides.com Management Theory CHAPTER 51 Maslow would say, although some needs must be satisfied before others The chairman of the psychology department at Brandeis University and one of the earliest researchers to study motivation, in 1943 Maslow proposed his famous hierarchy of human needs: physiological, safety, love, esteem, and self-actualization.18 We discuss this hierarchy in detail in Chapter 12, where we explain why Maslow is important Douglas McGregor and Theory X versus Theory Y  Having been for a time a college president (at Antioch College in Ohio), Douglas McGregor came to realize that it was not enough for managers to try to be liked; they also needed to be aware of their attitudes toward employees.19 Basically, McGregor suggested in a 1960 book, these attitudes could be either “X” or “Y.” Theory X represents a pessimistic, negative view of workers In this view, workers are considered to be irresponsible, to be resistant to change, to lack ambition, to hate work, and to want to be led rather than to lead Theory Y represents the outlook of human relations proponents—an optimistic, positive view of workers In this view, workers are considered to be capable of accepting responsibility, self-direction, and self-control and of being imaginative and creative Why Theory X/Theory Y Is Important: The principal contribution offered by the Theory X/Theory Y perspective is that it helps managers understand how their beliefs affect their behavior For example, Theory X managers are more likely to micromanage, which leads to employee dissatisfaction, because they believe employees are inherently lazy Managers can be more effective by considering how their behavior is shaped by their expectations about human nature Underlying both Maslow’s and McGregor’s theories is the notion that more job satisfaction leads to greater worker performance—an idea that is somewhat controversial, as we’ll discuss in Chapter 11 What is your basic view of human nature? Your attitude could be key to your career success To see the general direction of your outlook, try the following self-assessment if your instructor assigns it to you SELF-ASSESSMENT 2.1 What Is Your Orientation toward Theory X/Theory Y? This self-assessment is designed to reveal your orientation as a manager—whether it tends toward Theory X or Theory Y Please be prepared to answer these questions if your instructor has assigned Self-Assessment 2.1 in Connect To what extent you think your results are an accurate reflection of your beliefs about others? Are you surprised by the results? As a leader of a student or work-related project team, how might your results affect your approach toward leading others? Explain If an employee doesn’t seem to show ambition, can that be changed? Discuss The Behavioral Science Approach The human relations movement was a necessary correction to the sterile approach used within scientific management, but its optimism came to be considered too simplistic for practical use More recently, the human relations view has been superseded by the behavioral science approach to management Behavioral science relies on scientific re- search for developing theories about human behavior that can be used to provide practical tools for managers The disciplines of behavioral science include psychology, sociol- ogy, anthropology, and economics ● www.freebookslides.com 52 PART 1 Introduction EXAMPLE Application of Behavioral Science Approach: The Open-Plan Office—Productivity Enhancer or Productivity Killer? Today most office layouts have an open floor plan, mixing managers and workers in completely open offices, often using communal tables.20 When the concept originated in the 1950s, its purpose was to “facilitate communication and idea flow,” according to one report.21 But does it work? The Distraction Next to You.  On any given day, probably 40%–60% of all your workplace interactions (including face-toface chats and e-mails) will be with your immediate fellow employees, says a behavioral scientist who studies such things There is only a 5%–10% chance of your interacting with someone two rows away.22 And, research shows, face-to-face interruptions constitute one-third more intrusions than e-mail or phone calls.23 Indeed, many behavioral science studies now find that, as one Bloomberg Businessweek article puts it, “open-plan offices make employees less productive, less happy, and more likely to get sick.”24 Open arrangements have proven to be cumbersome, noisy, disruptive, and stressful Instead of feeling closer to their colleagues, workers have become resentful, dissatisfied, more distant—and even sicker.25 “This Means I’m Busy!”  So how are conscientious workers in open-plan offices to get anything done—to avoid “pesky, productivity-sapping interruptions,” in one writer’s phrase?26 Various workers have come up with their own ways of alerting others that they are not to be interrupted Some wear special bright-colored sashes or vests or hats Some block off their work spaces with neon-yellow plastic “Do Not Disturb” barricade tape (from CubeGuard) Some retreat to designated closed offices as “no interruption” zones to get necessary work done The Right Seating Mix.  Another way to reduce disruption is for companies to assign who sits next to whom, rather than using unassigned seating In open-plan offices, “people literally catch emotions from one another like a virus,” says Wharton School management professor Sigal Barsade, who suggests that the people who work best together are those with similar emotional temperaments.27 For instance, mixing extroverts and introverts can lower the productivity of both, as introverts, who are quiet and like to keep their distance, may resent the intrusions of extroverts, those outgoing coworkers who need interaction and love to talk and talk.28 Paul English, co-founder of the travel website Kayak.com, uses new hires as an excuse to alter existing open-office seating arrangements, taking into careful consideration everything from “employees’ personalities to their political views to their propensity for arriving at work early—or, more important, their propensity for judging colleagues who arrive late,” says one report.29 “If I put someone next to you that’s annoying or there’s a total style clash, I’m going to make your job depressing,” English says YOUR CALL If about 70% of U.S employees now work in open offices, yet behavioral science studies largely show they are not a productive or beneficial arrangement, why you suppose they continue to be so prevalent? What kind of office arrangements you think would work best and why? Open-plan seating What kind of office would you prefer to have for yourself—a private office, a shared private office, a partitioned cubicle, or a desk in an open office scattered with other desks with no partitions? Which would be most comfortable for you personally? Why, theoretically, would the open office best promote superior performance? © Kelvin Murray/Getty Images www.freebookslides.com Management Theory 2.4 ? MAJOR QUESTION CHAPTER 53 Quantitative Viewpoints: Management Science and Operations Management If the manager’s job is to solve problems, how might the two quantitative approaches help? THE BIG PICTURE The third and last category under historical perspectives consists of quantitative viewpoints, which emphasize the application to management of quantitative techniques, such as statistics and computer simulations Two approaches of quantitative management are management science and operations management During the air war known as the Battle of Britain in World War II, a relative few of England’s Royal Air Force fighter pilots and planes were able to successfully resist the overwhelming might of the German military machine How did they it? Military planners drew on mathematics and statistics to determine how to most effectively allocate use of their limited aircraft When the Americans entered the war in 1941, they used the British model to form operations research (OR) teams to determine how to deploy troops, submarines, and other military personnel and equipment most effectively For example, OR techniques were used to establish the optimum pattern that search planes should fly to try to locate enemy ships After the war, businesses also began using these techniques One group of former officers, who came to be called the Whiz Kids, used statistical techniques at Ford Motor Co to make better management decisions Later Whiz Kid Robert McNamara, who had become Ford’s president, was appointed Secretary of Defense and introduced similar statistical techniques and cost–benefit analyses throughout the Department of Defense Since then, OR techniques have evolved into quantitative management, the application to management of quantitative techniques, such as statistics and computer simulations Two branches of quantitative management are management science and operations management Management Science: Using Mathematics to Solve Management Problems How would you go about deciding how to assign utility repair crews during a blackout? Or how many package sorters you needed and at which times for an overnight delivery service such as FedEx or UPS? You would probably use the tools of management science Management science is not the same as Taylor’s scientific management Management science focuses on using mathematics to aid in problem solving and decision making Sometimes management science is called operations research Why Management Science Is Important: Management science stresses the use of rational, science-based techniques and mathematical models to improve decision making and strategic planning Management science is a forerunner to analytics and Big Data, as we will discuss in Chapter FedEx What management tools you use to schedule employees and aircraft to deal with wide variations in package volume—such as December 23 versus December 26? © Zuma Press Inc/Alamy www.freebookslides.com 54 PART 1 Introduction EXAMPLE Management Science: “Find Me More Music I Like!” “Once, all you needed to succeed in the music business were a pair of gold ears and some hustle,” says writer Ben Sisario “Now, it also takes mountains of data.”30 Four Hundred Unique Musical Qualities.  Tim Westergren studied music composition and computer science in college, played in unsuccessful rock bands, and worked as a film-score composer Then he thought to try to map song musical qualities in what he called the Music Genome Project, which he described as “an enormous collection of songs that have been analyzed, one song at a time, using 400 unique qualities.”31 In 2005 the genome became the basis for Oakland, California– based Pandora Internet Radio, which essentially applies management science (metrics) to music selection Recommendations.  Pandora is an online music streaming and automated music recommendation service that allows users to type in a favorite song or artist, and then Pandora’s software plays other music with the same musical characteristics In late 2015 the company “that plays only music you like” reported it had 78.1 million monthly active listeners.32 YOUR CALL Today there are many companies that have computer “recommendation engines” to suggest new products keyed to a consumer’s individual tastes, such as Spotify, Apple Music, and Warner Music; Amazon for books; and Netflix for films Do you think there’s any room left for experienced human decision makers who don’t rely on numbers? Do you think reliance on the automated recommendation process cheats consumers out of “pleasant surprises” and new discoveries? Operations Management: Being More Effective Operations management focuses on managing the production and delivery of an organization’s products or services more effectively Operations management is concerned with work sched- uling, production planning, facilities location and design, and optimum inventory levels Why Operations Management Is Important: Through the rational management of resources and distribution of goods and services, operations management helps ensure that business operations are efficient and effective ● EXAMPLE Operations Management: Using “the Toyota Way” to Benefit Hospital Patients Over the years, Toyota Motor Corp has developed a variety of production techniques that drew in part on operations management.33 Together these methods constitute “the Toyota Way,” the company’s systematic approach to producing vehicles efficiently, with the ultimate aim of pleasing the customer First, the process emphasizes the smoothest possible flow of work, by identifying the many steps in a production process and eliminating unnecessary ones (called value-stream mapping) It also uses teamwork to examine problems and fix them as soon as they appear (mistake proofing) In addition, the carmaker uses the just-in-time approach to obtain supplies from vendors only as they are needed in the factory These efficient techniques, which all come under the term “lean management,” has enabled Toyota to sell its cars on the basis of their superior quality.34 Adapting Toyota’s Philosophy and Practices to Hospitals. A growing number of U.S hospitals have been forced to compete harder under the federal Affordable Care Act as formerly uninsured patients have begun to understand they not necessarily have to go to their closest public safety-net hospital but could be a little more choosey That realization put public hospitals “in the unusual position of having to attract and retain ‘paying customers’ to survive,” writes reporter Victoria Colliver.35 Accordingly, around 2000, hospital administrators began to apply Toyota’s techniques to improving hospital quality, safety, and patient satisfaction “A Million Small Changes.”  The Toyota method is “really focused on the small things,” a hospital CEO told Colliver A team of employees meets for a week-long hands-on session to come up with a plan that makes specific, small changes that can have a major impact One team, for instance, focused on whittling 10 minutes off the typical 40 minutes of time it took from wheeling a patient into the operating room until the first surgical incision “Ten minutes may not sound like a lot,” observes Colliver, “but those minutes can add up in wasted time and cost when a staff of nurses and doctors has to wait for a piece of equipment or a patient to be ready for them.” Another team was able to reduce outpatient wait time from 4–6 hours to 2.5 hours YOUR CALL In Chapter 1, we described the problem of “efficiency versus effectiveness.” Which is the focus of lean management? www.freebookslides.com Management Theory 2.5 ? MAJOR QUESTION CHAPTER Systems Viewpoint How can the exceptional manager be helped by the systems viewpoint? THE BIG PICTURE Three contemporary management perspectives are (1) the systems, (2) the contingency, and (3) the qualitymanagement viewpoints The systems viewpoint sees organizations as a system, either open or closed, with inputs, outputs, transformation processes, and feedback The systems viewpoint has led to the development of complexity theory, the study of how order and pattern arise from very complicated, apparently chaotic systems The contingency viewpoint emphasizes that a manager’s approach should vary according to the individual and environmental situation It is a forerunner to evidence-based management The qualitymanagement viewpoint has two traditional approaches: quality control, the strategy for minimizing errors by managing each stage of production, and quality assurance, which focuses on the performance of workers, urging employees to strive for zero defects A third quality approach is the movement of total quality management (TQM), a comprehensive approach dedicated to continuous quality improvement, training, and customer satisfaction Being of a presumably practical turn of mind, could you run an organization or a department according to the theories you’ve just learned? Probably not The reason: People are complicated To be an exceptional manager, you need to learn to deal with individual differences in a variety of settings Thus, to the historical perspective on management (classical, behavioral, and quantitative viewpoints), let us now add the contemporary perspective, which consists of three viewpoints (See Figure 2.3.) These consist of: ■ Systems ■ Contingency ■ Quality-management In this section, we discuss the systems viewpoint FIGURE 2.3  The contemporary perspective: three viewpoints—systems, contingency, and quality-management The Contemporary Perspective (1960s–Present) The Systems Viewpoint Regards the organization as systems of interrelated parts that operate together to achieve a common purpose The Contingency Viewpoint Emphasizes that a manager’s approach should vary according to—i.e., be contingent on—the individual and environmental situation The Quality-Management Viewpoint Three approaches Quality control Strategy for minimizing errors by managing each state of production Quality assurance Focuses on the performance of workers, urging employees to strive for “zero defects” Total quality management Comprehensive approach dedicated to continuous quality improvement, training, and customer satisfaction Proponent: Walter Shewart 55 Proponents: W Edwards Deming Joseph M Juran www.freebookslides.com 56 PART 1 Introduction The Systems Viewpoint The 27 bones in the hand The monarchy of Great Britain A weather storm front Each of these is a system A system is a set of interrelated parts that operate together to achieve a common purpose Even though a system may not work very well—as in the inefficient way the Italian government collects taxes, for example—it is nevertheless still a system The systems viewpoint regards the organization as a system of interrelated parts By adopting this point of view, you can look at your organization both as (1) a collection of subsystems—parts making up the whole system—and (2) a part of the larger environment A college, for example, is made up of a collection of academic departments, support staffs, students, and the like But it also exists as a system within the environment of education, having to be responsive to parents, alumni, legislators, nearby townspeople, and so on The Four Parts of a System The vocabulary of the systems perspective is useful because it gives you a way of understanding many different kinds of organizations The four parts of a system are defined as follows: Inputs are the people, money, information, equipment, and materials required to produce an organization’s goods or services Whatever goes into a system is an input Transformational processes are the organization’s capabilities in management, internal processes, and technology that are applied to converting inputs into outputs The main activity of the organization is to transform inputs into outputs 3 Outputs are the products, services, profits, losses, employee satisfaction or discontent, and the like that are produced by the organization Whatever comes out of the system is an output Feedback is information about the reaction of the environment to the outputs that affects the inputs Are the customers buying or not buying the product? That information is feedback The four parts of a system are illustrated below (See Figure 2.4.) FIGURE 2.4  The four parts of a system Inputs The people, money, information, equipment, and materials required to produce an organization’s goods or services Example: For a jewelry designer—design, money, artistic talent, gold and silver, tools, marketing expertise Transformational processes The organization’s capabilities in management and technology that are applied to converting inputs into outputs Example : Designer’s management skills (planning, organizing, leading, controlling), gold and silver smithing tools and expertise, website for marketing Feedback Information about the reaction of the environment to the outputs, which affects the inputs Example: Web customers like African-style designs, dislike imitation Old English designs Outputs The products, services, profits, losses, employee satisfaction or discontent, etc., produced by the organization Example : Gold and silver rings, earrings, bracelets, etc www.freebookslides.com Management Theory CHAPTER 57 Closed Systems, Open Systems, and the Concept of Synergy  A closed system has little interaction with its environment; that is, it receives very little feedback from the outside The classical management viewpoint often considered an organization a closed system So does the management science perspective, which simplifies organizations for purposes of analysis However, any organization that ignores feedback from the environment opens itself up to possibly spectacular failures An open system continually interacts with its environment Today nearly all organizations are, at least to some degree, open systems rather than closed Open systems have the potential of producing synergy Synergy (pronounced “sin-ur-jee”) is the idea that two or more forces combined create an effect that is greater than the sum of their individual effects, as when a guitarist, drummer, and bassist combine to play a better version of a song than any of them would playing alone Or a copywriter, art director, and photographer combine to create a magazine ad, each representing various influences from the environment Complexity Theory: The Ultimate Open System  The systems viewpoint has led to the development of complexity theory, the study of how order and pattern arise from very complicated, apparently chaotic systems Complexity theory recognizes that all complex systems are networks of many interdependent parts that interact with each other according to certain simple rules Used in strategic management and organizational studies, the discipline seeks to understand how organizations, considered as relatively simple and partly connected structures, adapt to their environments Why the Systems Viewpoint—Particularly the Concept of Open Systems—Is Important: History is full of accounts of products that failed (such as the 1959 Ford Edsel) because they were developed in closed systems and didn’t have sufficient feedback Open systems stress multiple feedback from both inside and outside the organization, resulting in a continuous learning process to try to correct old mistakes and avoid new ones ● Do Nudges Achieve Results? Using the Systems Viewpoint to Find Out Here’s something that social scientists have long known, says economist Justin Wolfers: “Small changes in how choices are presented can lead to big changes in behavior.” How can we verify this? “By careful testing of one idea against another,” he says “The idea is to let hard data judge what works.”36 In 2014 the White House assembled a Social and Behavioral Sciences Team (which came to be known as the “Nudge Unit”) to experiment in applying behavioral insights to help government deliver better services and save money Their small tweaks, described in their 2015 annual report, have yielded impressive results.37 And, Wolfers suggests, because the cost of the tweaks is so low, even moderate impacts could yield extraordinary benefits Repaying Student Loans: Results of a Closed System.  If after college you are struggling to repay your student loans, did you know that you can apply to the government to have your monthly payments reduced to a more manageable share of your income? The government mandates that you are obligated to repay your debt, but in this alternate arrangement you are allowed to so more slowly However, lots of borrowers who are new to repayment are unaware of this possibility and miss their first payments This is an example of a closed system EXAMPLE Repaying Student Loans: Results of an Open System. The problem, observes Wolfers, is that few people are aware of this possibility of making reduced payments over a longer period of time, and so few apply “That’s a shame,” says Wolfers, “because the federal government actually knows who is struggling to repay their loans and could help them directly.” How would things be different under an open system? Researchers sent e-mails to student loan borrowers who had missed their first payments reminding them that they had missed a payment and directed them to information about different repayment plans The result was a four-fold increase in applications for repayment plans.38 YOUR CALL Using “small nudges” like this to create open feedback systems and testing their results to see what works has proven successful in reducing use of printing paper, increasing retirement contributions, spurring health care enrollment, and other matters Can you think of an idea in which you’d like to try small nudges? www.freebookslides.com 58 PART 1 Introduction 2.6 ? MAJOR QUESTION Contingency Viewpoint In the end, is there one best way to manage in all situations? THE BIG PICTURE The second viewpoint in the contemporary perspective, the contingency viewpoint, emphasizes that a manager’s approach should vary according to the individual and environmental situation The classical viewpoints advanced by Taylor and Fayol assumed that their approaches had universal applications—that they were “the one best way” to manage organizations The contingency viewpoint began to develop when managers discovered that under some circumstances better results could be achieved by breaking the one-best-way rule The contingency viewpoint emphasizes that a manager’s approach should vary according to—that is, be contingent on—the individual and the environmental situation A manager subscribing to the Gilbreth approach might try to get workers to be more productive by simplifying the steps A manager of the Theory X/Theory Y persuasion might try to use motivational techniques But the manager following the contingency viewpoint would simply ask, “What method is the best to use under these particular circumstances?” EXAMPLE The Contingency Viewpoint: What Are the Best Kinds of Benefits? Money is not the only motivator for employee productivity Applying the contingency approach, managers have found there are incentives in offering various kinds of fringe benefits— one recent report listed more than 300 such benefits, from health plans to house down-payment assistance.39 Small Incentives.  Small businesses may not be able to dangle big raises, but they can offer imaginative benefits that big organizations may find too expensive or impractical Examples: Free team lunches every Friday (Hukkster, a sales alert website in New York) “Free Beer Friday” (Universal Information Services, Omaha, Nebraska) “Bring Your Pet to Work”—no messes or barking, please (VoIP Supply, Amherst, New York) Twice-a-week yoga instruction (Litzky Public Relations, Hoboken, New Jersey) Paid week off to volunteer for good causes (teen-counseling company NextStepU.com, Rochester, New York) Various companies offer other options: at-your-desk meditation, drop-off laundry services, free theme park tickets, even adoption assistance and funeral planning.40 Large Incentives.  Are little perks all that’s required? Netflix has decided that the best way to keep top talent is to hire people who are “fully formed adults” who will put the company first and s­ upport a high-performance workplace Thus, instead of having a rigid system of vacation days and a formal travel and expense policy, Netflix decided to take the ultimate contingency approach, embodied in the policy “Act in Netflix’s best interests.” This means salaried employees can take whatever time they feel is appropriate and enforce their own travel and expense policies—in other words, they are trusted to act as fully formed adults.41 YOUR CALL One career analyst suggests that people are motivated most by autonomy, developing their skills, and a sense of higher purpose.42 This opinion is echoed in a survey that found the top factors in determining people’s happiness at work are whether they enjoy the tasks required of them, are able to focus on the things they best, and are proud of their employer.43 Another study found that people care, first, about the office environment, positive culture, and compensation; second, a job that makes the world a better place or a company that shares their values; and third, company prestige and rapid promotion.44 Considering these findings and applying a contingency ­approach to stimulating productivity at work, what different kinds of incentives or benefits would you offer for hourly shift workers, salaried middle managers, and work-at-home employees? www.freebookslides.com Management Theory Contingency approach Giving employees more money is not the only way to motivate them to be more productive Sometimes small rewards, such as allowing pets at work, are equally effective What incentives would make you stay at a job for which you are not really suited and to your best while there? © National Geographic Creative/Alamy Gary Hamel: Management Ideas Are Not Fixed, They’re a Process Discussion of the contingency viewpoint leads us naturally to the thoughts of Gary Hamel, co-founder of the Management Innovation Lab and ranked by The Wall Street Journal in 2008 as the most influential business thinker.45 “Over time,” he says, “every great invention, management included, travels a road that leads from birth to maturity, and occasionally to senescence.”46 Hamel holds that much of management theory is dated and doesn’t fit the current realities of organizational life and that management innovation is essential to future organizational success Indeed, he suggests, what we need to is look at management as a process, and then make improvements and innovation ongoing and systematic After all, if managers now innovate by creating new products or new business strategies, why can’t they be equally innovative in how they manage their companies? How forward-looking managers get the ball rolling in management innovation, particularly in a traditional, conventional company? Hamel believes that the answer can be found by identifying core beliefs that people have about the organization, especially those that detract from the pursuit of management innovation He suggests that these beliefs can be rooted out by repeatedly asking the right questions—namely, the following: Is this a belief worth challenging? Is it debilitating? Does it get in the way of an important organizational attribute that we’d like to strengthen? Is this belief universally valid? Are there counterexamples? If so, what we learn from those cases? How does this belief serve the interests of its adherents? Are there people who draw reassurance or comfort from this belief? Have our choices and assumptions conspired to make this belief self-­ fulfilling? Is this belief true simply because we have made it true—and, if so, can we imagine alternatives?47 Why the Contingency Viewpoint Is Important: The contingency viewpoint would seem to be the most practical of the viewpoints discussed so far because it addresses problems on a case-by-case basis and varies the solution accordingly Evidence-Based Management: Facing Hard Facts, Rejecting Nonsense Evidence-based management is very much in the spirit of the contingency viewpoint’s practical approach to management Evidence-based management means translating principles based on best evidence into organizational practice, bringing rationality to the decision-making process CHAPTER 59 www.freebookslides.com 60 PART 1 Introduction As its two principal proponents, Stanford business scholars Jeffrey Pfeffer and Robert Sutton, put it, evidence-based management is based on the belief that “facing the hard facts about what works and what doesn’t, understanding the dangerous half-truths that constitute so much conventional wisdom about management, and rejecting the total nonsense that too often passes for sound advice will help organizations perform better.”48 Learning to make managerial decisions based on evidence is the approach we hope you will learn to take after studying many other approaches—the perspectives we covered in this chapter We will consider evidence-based management further, along with analytics and Big Data, in Chapter ● PRACTICAL ACTION Evidence-Based Management: An Attitude of Wisdom “These days, there aren’t any hot, new trends, just a lot of repackaged ones from the past,” writes Wall Street Journal columnist Carol Hymowitz.49 “Executives have been treated to an overdose of management guides that mostly haven’t delivered what they promised Many bosses have adopted them all, regardless of their company’s business model, balance sheet, competition, employee bench strength, or any other unique qualities They have become copycat managers, trying to find a one-stop, fix-it-all answer to their various problems.” How will you know whether the next “fix-it-all” book to hit the business bestseller list is simply a recycling of old ideas? The answer is: You have to have studied history and theory— the subject of this chapter.50 Proving and Disproving Theories: The Purpose of Research.  “A theory that helps one company succeed can be fatal for another operating under different conditions,” write Clayton Christensen and Michael Raynor.”51 By “theory” they don’t mean just the sweeping historic ideas we’ve discussed in this chapter, but also such frequent management considerations as: When should a big company be decentralized into independent “hot businesses”? Should an organization always give priority to its “core competencies,” the unique characteristics that provide its competitive advantages? When start-ups are funded by venture capitalists, those professionals who loan money in return for part ownership and profits, does this event make the start-ups more likely to abandon failing initiatives and thus boost their chances of success? Rather than being selected in a seat-of-the-pants kind of way—which can lead to big mistakes—management theories should be developed and analyzed systematically through research Theories, Carlson and Raynor suggest, should pinpoint causes, predict possible results, and be fine-tuned when research shows the results aren’t as forecast “Rarely consider positive research findings the final word,” they stress “Progress comes when researchers refine a theory to explain situations in which the theory previously failed.” Research should follow the scientific method, a logical process, embodying four steps: (1) You observe events and gather facts (2) You pose a possible solution or explanation based on those facts (3) You make a prediction of future events (4) You test the prediction under systematic conditions Following the Evidence.  The process of scientific reasoning underlies what is known as evidence-based management As we stated, evidence-based management means translating principles based on best evidence into organizational practice, bringing rationality to the decision-making process.52 Evidence-based management derives from evidence-based medicine, embracing what Jeffrey Pfeffer and Robert Sutton call an attitude of wisdom This is a mind-set that, first, is willing to set aside belief and conventional wisdom and to act on the facts and, second, has an unrelenting commitment to gathering information necessary to make informed decisions and to keeping pace with new evidence to update practices.53 “The way a good doctor or a good manager works,” Sutton says, “is to act with knowledge while doubting what you know So if a patient goes to a doctor, you hope the doctor would two things: first look at the literature and make the best decision given what’s available Then actually track the progress of the treatment and see what unexpected side effects you’re having and what things are working.”54 Three Truths.  Evidence-based management is based on three truths: • There are few really new ideas: Most supposedly new ideas are old, wrong, or both • True is better than new: Effective organizations and managers are more interested in what is true than in what is new • Doing well usually dominates: Organizations that simple, obvious, and even seemingly trivial things well will dominate competitors who search for “silver bullets and instant magic.” YOUR CALL Do you think managers are often driven by fads, by what they’ve read in the latest book or heard in the latest management seminar? Have you ever heard of a manager taking an experimental approach, as in trying out a new idea with an open mind to see what happens? How could you profit by taking an evidencebased approach to the ideas we discussed in this chapter? www.freebookslides.com Management Theory 2.7 ? MAJOR QUESTION CHAPTER 61 Quality-Management Viewpoint Can the quality-management viewpoint offer guidelines for true managerial success? THE BIG PICTURE The quality-management viewpoint, the third category under contemporary perspectives, consists of quality control, quality assurance, and especially the movement of total quality management (TQM), dedicated to continuous quality improvement, training, and customer satisfaction In 1971, in his book Wheels, author Arthur Hailey advised Americans not to buy cars that were assembled on Mondays or Fridays—days when cars supposedly suffered from quality problems because they were put together when absenteeism and hangovers were highest among dissatisfied autoworkers Although cars are not built all in one day (various parts are built at different times) and are not stamped with a “birth date,” Hailey’s claim reinforced the notion that, despite the efforts of quantitative management, the American cars produced on those days were the most shoddily made of what were coming to look like generally shoddy products The energy crisis of the 1970s showed different possibilities, as Americans began to buy more fuel-efficient, better-built cars made in Japan Today the average American car lasts much longer than it used to, and some U.S cars are equal or superior to the best foreign competitors—for example, the 2014 Cadillac CTS 3.6 beat the 2014 Mercedes-Benz E350, according to one automotive review.55 Although not a “theory” as such, the quality-management viewpoint, which includes quality control, quality assurance, and total quality management, deserves to be considered because of its impact on contemporary management perspectives Quality Control and Quality Assurance Quality refers to the total ability of a product or service to meet customer needs Quality is seen as one of the most important ways of adding value to products and services, thereby distinguishing them from those of competitors Two traditional strategies for ensuring quality are quality control and quality assurance Quality Control  Quality control is defined as the strategy for minimizing errors by managing each stage of production Quality control techniques were developed in the 1930s at Bell Telephone Labs by Walter Shewart, who used statistical sampling to locate errors by testing just some (rather than all) of the items in a particular production run Quality Assurance  Developed in the 1960s, quality assurance focuses on the performance of workers, urging employees to strive for “zero defects.” Quality assurance has been less successful because often employees have no control over the design of the work process Total Quality Management: Creating an Organization Dedicated to Continuous Improvement In the years after World War II, the imprint “Made in Japan” on a product almost guaranteed that it was cheap and flimsy That began to change with the arrival in Japan of two Americans, W Edwards Deming and Joseph M Juran W Edwards Deming  Desperate to rebuild its war-devastated economy, Japan eagerly received mathematician W Edwards Deming’s lectures on “good management.” Deming believed that quality stemmed from “constancy of purpose”—steady focus on www.freebookslides.com 62 PART 1 Introduction an organization’s mission—along with statistical measurement and reduction of variations in production processes He also thought that managers should stress teamwork, be helpful rather than simply give orders, and make employees feel comfortable about asking questions Joseph M Juran  Another pioneer with Deming in Japan’s quality revolution was Joseph M Juran, who defined quality as “fitness for use.” By this he meant that a product or service should satisfy a customer’s real needs Thus, the best way to focus a company’s efforts, Juran suggested, was to concentrate on the real needs of customers TQM: What It Is  From the work of Deming and Juran has come the strategic commitment to quality known as total quality management Total quality management (TQM) is a comprehensive approach—led by top management and supported throughout the organization—dedicated to continuous quality improvement, training, and customer satisfaction The four components of TQM are as follows: TQM pioneer W Edwards Deming in 1961 Deming proposed his so-called 85–15 rule—namely, when things go wrong, there is an 85% chance that the system is at fault, only a 15% chance that the individual worker is at fault Most of the time, he thought, managers erroneously blamed individuals rather than the system © Bettmann/Corbis Make continuous improvement a priority TQM companies are never satisfied They make small, incremental improvements an everyday priority in all areas of the organization By improving everything a little bit of the time all the time, the company can achieve long-term quality, efficiency, and customer satisfaction Get every employee involved To build teamwork, trust, and mutual respect, TQM companies see that every employee is involved in the continuous improvement process This requires that workers must be trained and empowered to find and solve problems Listen to and learn from customers and employees TQM companies pay attention to their customers, the people who use their products or services In addition, employees within the companies listen and learn from other employees, those outside their own work areas Use accurate standards to identify and eliminate problems TQM organizations are always alert to how competitors things better, then try to improve on them—a process known as benchmarking Using these standards, they apply statistical measurements to their own processes to identify problems Why Total Quality Management Is Important: The total quality management viewpoint emphasizes infusing concepts of quality throughout the total organization in a way that will deliver quality products and services to customers The adoption of TQM helped American companies deal with global competition Want to find out how committed to TQM the organizations are that you are most familiar with? Even the most sophisticated organizations, you may be surprised to learn in the following self-assessment, may not measure up very well when it comes to the quality of their products ● SELF-ASSESSMENT 2.2 To What Extent Is Your Organization Committed to Total Quality Management? This self-assessment is designed to gauge the extent to which the organization you have in mind is committed to total quality management (TQM) Please be prepared to answer these questions if your instructor has assigned Self-Assessment 2.2 in Connect Which of the five dimensions is most and least important to the organization? Are you surprised by this conclusion? Explain Based on the three lowest-rated items in the survey, what advice would you give to senior leaders in the company? Considering all of the questions in the survey, which three you think are most important in terms of fostering TQM in a company? Why? www.freebookslides.com Management Theory 2.8 ? MAJOR QUESTION CHAPTER The Learning Organization in an Era of Accelerated Change Organizations must learn or perish How I build a learning organization? THE BIG PICTURE Learning organizations actively create, acquire, and transfer knowledge within themselves and are able to modify their behavior to reflect new knowledge There are three ways you as a manager can help build a learning organization Ultimately, the lesson we need to take from the theories, perspectives, and viewpoints we have described is this: We need to keep on learning Organizations are the same way: Like people, they must continually learn new things or face obsolescence A key challenge for managers, therefore, is to establish a culture of shared knowledge and values that will enhance their employees’ ability to learn—to build so-called learning organizations Learning organizations, says Massachusetts Institute of Technology professor Peter Senge, who coined the term, are places “where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning how to learn together.”56 The Learning Organization: Handling Knowledge and Modifying Behavior More formally, a learning organization is an organization that actively creates, acquires, and transfers knowledge within itself and is able to modify its behavior to reflect new knowledge.57 Note the three parts: Creating and acquiring knowledge In learning organizations, managers try to actively infuse their organizations with new ideas and information, which are the prerequisites for learning They acquire such knowledge by constantly scanning their external environments, by not being afraid to hire new talent and expertise when needed, and by devoting significant resources to training and developing their employees Transferring knowledge American Express and Apple are not only standouts in their business sectors, says management studies professor Robert Grossman, they “nurture top-to-bottom learning cultures.”58 Managers actively work at transferring knowledge throughout the organization, reducing barriers to sharing information and ideas among employees Electronic Data Systems (EDS), for instance, practically invented the informationtechnology services industry, but by 1996 it was slipping behind competitors—missing the onset of the Internet wave, for example When a new CEO, Dick Brown, took the reins in 1999, he changed the culture from “fix the problem yourself” to sharing information internally.59 Modifying behavior Learning organizations are The learning organization In rigid organizations, employees often nothing if not results oriented Thus, managers enkeep information to themselves In learning organizations, workers courage employees to use the new knowledge obare encouraged to share information with each other—both inside tained to change their behavior to help further the and outside their department © Sam Edwards/Getty Images RF organization’s goals.60 63 www.freebookslides.com 64 PART 1 Introduction How to Build a Learning Organization: Three Roles Managers Play To create a learning organization, managers must perform three key functions or roles: (1) build a commitment to learning, (2) work to generate ideas with impact, and (3) work to generalize ideas with impact.61 You can build a commitment to learning To instill in your employees an intellectual and emotional commitment to the idea of learning, you as a manager need to lead the way by investing in it, publicly promoting it, creating rewards and symbols of it, and performing other similar activities For example, to encourage employees to overcome fears about losing their jobs and exert some boldness in decision making, Jim Donald, CEO of Extended Stay America, created miniature “Get Out of Jail, Free” cards, which employees could call in whenever they took a big risk on behalf of the company—in effect giving them permission to make and learn from mistakes.62 You can work to generate ideas with impact As a manager, you need to try to generate ideas with impact—that is, ideas that add value for customers, employees, and shareholders—by increasing employee competence through training, experimenting with new ideas, and engaging in other leadership activities Xerox, for example, hired researchers called “innovation managers” to hunt for inventions and products from start-ups in India that could be adapted for the North American market Hewlett-Packard used its research lab in India to see how it could adapt mobile phone web-interface applications in Asia and Africa to markets in developed countries.63 You can work to generalize ideas with impact Besides generating ideas with impact, you can also generalize them—that is, reduce the barriers to learning among employees and within your organization You can create a climate that reduces conflict, increases communication, promotes teamwork, rewards risk taking, reduces the fear of failure, and increases cooperation In other words, you can create a psychologically safe and comforting environment that increases the sharing of successes, failures, and best practices Based on the above discussion, you wonder about the specific behaviors that people exhibit in a learning organization? It would be interesting to determine if you have ever worked for such an organization The following self-assessment was created to evaluate whether an organization you now work for or formerly worked for could be considered a serious learning organization The survey items provide a good indication of what it takes to become a learning organization ● SELF-ASSESSMENT 2.3 Are You Working for a Learning Organization? This self-assessment provides a measure of the extent to which an organization of your choice is a learning organization Please be prepared to answer these questions if your instructor has assigned Self-Assessment 2.3 in Connect What are the strengths and weaknesses of this company in terms of being a learning organization? If you were CEO of this organization, what changes would you make based on your survey results? Explain What suggestions would you make for how this organization might (1) build a commitment to learning, (2) work to generate ideas with impact, and (3) work to generalize ideas with impact? Discuss How does the learning score for the organization probably compare with the scores of other organizations you are familiar with? www.freebookslides.com Key Terms Used in This Chapter administrative management  47 behavioral science approach  51 behavioral viewpoint  49 classical viewpoint  45 closed system  57 complexity theory  57 contemporary perspective  44 contingency viewpoint  58 evidence-based management  59 feedback 56 hawthorne effect  50 historical perspective  44 human relations movement  50 inputs 56 learning organization  63 management science  53 open system  57 operations management  54 outputs 56 quality 61 quality assurance  61 quality control  61 quality-management viewpoint  61 quantitative management  52 scientific management  45 subsystems 56 synergy 57 system 56 systems viewpoint  56 total quality management (TQM)  62 transformation processes  56 Key Points 2.1 Evolving Viewpoints: How We Got to Today’s Management Outlook • The two overarching perspectives on management are (1) the historical perspective, which includes three viewpoints—classical, behavioral, and quantitative; and (2) the contemporary perspective, which includes three other viewpoints—systems, contingency, and quality-management • Six practical reasons for studying theoretical perspectives are that they provide (1) understanding of the present, (2) a guide to action, (3) a source of new ideas, (4) clues to the meaning of your managers’ decisions, (5) clues to the meaning of outside ideas, and (6) understanding as to why certain management practices produce positive outcomes 2.2 Classical Viewpoint: Scientific and Administrative Management • The first of the historical perspectives was the classical viewpoint, which emphasized finding ways to manage work more efficiently It had two branches, scientific management and administrative management • Scientific management emphasized the scientific study of work methods to improve productivity by individual workers It was pioneered by Frederick W Taylor, who offered four principles of science that could be applied to management, and by Frank and Lillian Gilbreth, who refined motion studies that broke job tasks into physical motions • Administrative management was concerned with managing the total organization Among its pioneers were Henri Fayol, who identified the major functions of management (planning, organizing, leading, controlling), and Max Weber, who identified five positive bureaucratic features in a well-performing organization • The classical viewpoint showed that work activity was amenable to a rational approach, but it has been criticized as being too mechanistic, viewing humans as cogs in a machine 2.3 Behavioral Viewpoint: Behavorism, Human Relations, and Behavioral Science • The second of the historical perspectives, the behavioral viewpoint emphasized the importance of understanding human behavior and of motivating employees toward achievement It developed over three phases: (1) early behaviorism, (2) the human relations movement, and (3) the behavioral science approach • Early behaviorism had three pioneers: (a) Hugo Munsterberg suggested that psychologists could contribute to industry by studying jobs, identifying the psychological conditions for employees to their best work (b) Mary Parker Follett thought organizations should be democratic, with employees and managers working together (c) Elton Mayo hypothesized a so-called Hawthorne effect, suggesting that employees worked harder if they received added attention from managers • The human relations movement suggested that better human relations could increase worker productivity Among its pioneers were (a) Abraham Maslow, who proposed a hierarchy of human needs, and (b) Douglas McGregor, who proposed a Theory X (managers have pessimistic view of workers) and Theory Y (managers have positive view of workers) • The behavioral science approach relied on scientific research for developing theories about human behavior that can be used to provide practical tools for managers 2.4 Quantitative Viewpoints: Management Science and Operations Management • The third of the historical perspectives, quantitative viewpoints emphasized the application to management of quantitative techniques • Two approaches are (1) management science, which focuses on using mathematics to aid in problem solving and decision making; and (2) operations management, which focuses on managing the Management Theory CHAPTER 65 ... Areas of Management? ? ?19 The Traditional Management Pyramid: Levels and Areas  19 Four Levels of Management? ?? 19 xxvi Areas of Management: Functional Managers versus General Managers  21 2.2 Classical... Understanding the Chapter: What Do I Know?  10 1 Management in Action  10 1 Legal/Ethical Challenge  10 2 CHAPTER FOUR Global Management: Managing across Borders? ?10 4 4 .1 Globalization: The Collapse... Evidence-Based Management: Facing Hard Facts, Rejecting Nonsense  59 2.7 Quality -Management Viewpoint  61 Quality Control and Quality Assurance  61 Total Quality Management: Creating an Organization